NYC Deferred Comp Rollover to Pension Plans

Under current IRS law, taxpayers are permitted to rollover 457(b), 401(k), IRAs, etc. retirement funds to a pension plan.  Currently, NYC Pension Funds generally offer this on a limited basis when pension plan members use retirement funds to purchase permissive service credits.  It would certainly be interesting if NYC Pension Plans offered all pre-retirees and retirees the ability to use retirement funds to purchase an additional annuity (pension).  The Washington State Department of Retirement Systems offers this type of benefit to its pre-retirees and retirees.  The following is an example of how it could work if offered by NYC Pension Plans.

Example 

John has been retired from the NYPD for five years, is 55 years old, and has an annual pension of $75,000.   John has a NYC DCP 457(b) balance of $400,000 and would like to rollover some of the money to purchase an annuity (additional pension) through the NYC Police Pension Fund.  If John was to rollover $200,000 he would receive $18,751 per year for a total pension of $93,751.  The additional pension could also be structured to provide a provision that John’s  beneficiary would at least recover the portion of his remaining $200,000 investment if John dies within a certain period of time.  For example, if John dies after receiving 3 years of the additional pension, the beneficiary would receive $143,747.

Getting this type of benefit for NYC Pension Plan members might be difficult to accomplish, but maybe it can get done if it is favorable to the City of New York.

2 replies
  1. Jim
    Jim says:

    Pete,
    As a current retiree with money in both the DCP’s 457 and 401(a), is it/would it be possible to roll these moneys into the SOC’s Principle Annuity Fund? If yes, would you need to satisfy the tax liabilities on the DCP plans prior to the rollover? Thanks Pete.

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